U.S. Consumer Prices Increase Modestly In August, Annual Growth Slows To Over 3-Year Low

(RTTNews) - While the Labor Department released a report on Wednesday showing consumer prices in the U.S. increased in line with estimates in the month of August, the annual rate of consumer price growth slowed by slightly more than expected.

The Labor Department said its consumer price index rose by 0.2 percent in August, matching the uptick seen in July as well as economist estimates.

Meanwhile, the report said the annual rate of consumer price growth slowed to 2.5 percent in August from 2.9 percent in July. Economists had expected the year-over-year growth to decelerate to 2.6 percent.

With the bigger than expected slowdown, consumer prices saw the smallest 12-month increase since February 2021.

The monthly increase by consumer prices was largely due to continued growth in shelter costs, which climbed by 0.5 percent in August after rising by 0.4 percent in July. A 0.8 percent decrease by energy prices helped limit the upside.

Excluding food and energy prices, the Labor Department said core consumer prices rose by 0.3 percent in August after inching up by 0.2 in July. Economists had expected core prices to rise by another 0.2 percent.

The annual rate of core consumer price growth was unchanged from the previous month at 3.2 percent in August, in line with economist estimates.

The higher shelter costs contributed to the monthly increase by core consumer prices along with higher prices for airline fares, motor vehicle insurance, education, and apparel.

On the other hand, prices for used cars and trucks, household furnishings and operations, medical care, communication, and recreation were among those that decreased over the month.

"The hotter core CPI increase was disappointing after several months of cooler readings and highlights the sticky nature of the recent inflation surge," said Nationwide Senior Economist Ben Ayers.

He added, "This should clinch a smaller, 25 basis points rate cut from the Fed next week as Fed officials remain wary to feed any lingering price momentum for the economy."

The Labor Department is scheduled to release a separate report on Thursday on producer price inflation in the month of August.

Economists currently expect the producer prices to inch up by 0.1 percent for the second straight month, while the annual rate of producer price growth is expected to slow to 1.8 percent in August from 2.2 percent in July.